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Tips for Successful Swing trading

Post on: 9 Апрель, 2015 No Comment

Swing trading involves selling a currency when it is overbought and buying it when it is oversold to get a profit as the price point turns down. It works on the principle that markets respond to demand and supply in the long term. In the short term, however, prices are pushed to the extremes (downside or upside) when greed and fear dominate the trade. The short-term price increase, however, is short-lived and prices return to a realistic amount quickly. Hence, it allows traders to get high rewards at low risks within a short period.

Tips for Successful Swing Trading

Here are some tips for successful swing trading:

Look for sharp and short price increases

Ensure the correct execution of trading signals in a bullish market

Look out for resistance level and wait for its testing. Else, look for resistance already tested and held on several occasions.

Focus on momentum indicators which indicate that a currency is overbought. You can use a few best momentum indicators to analyze the condition of the market. Look out for prices moving strongly towards support or resistance and confirm the turning of momentum. You can use stochastic indicator, a visual indicator, to confirm that the price momentum is indeed decreasing. When the market moves towards resistance, the stochastic lines will point up; when market moves down, the opposite applies.

Sell a currency when you see downturn and divergence in momentum indicators.

Set your target and bank your profit just above the key level. Waiting for long so as to hit the level may be risky, as it may eat into your profits. Determine the right time to sell and make profit by keeping a close eye on the market.

These tips can help you perform low risk high rewards trades that can help reap significant profits. An effective and profitable way of trading, swing trading gives traders the much needed edge in the market. Being a middle path between long term trading and day trading, it is also easier, less stressful and more visible than other forms of trading. A typical trade will last two to 15 days and benefits traders from trending or corrections in value sideways. Besides, the risk/reward potential of a trade can also be easily controlled with swing trading.

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